8 college financial aid roadblocks and how to avoid them

Paying for college is a bit like navigating the world’s worst fun house. Prices are a mirage, aid awards can pop out of the most unexpected places and loopholes are just waiting to throw you at every turn. There are lots of reasons why college financing is both confusing and frustrating, but perhaps the biggest is that it can feel like the rules are out to get you. Every single year, the following eight unfortunate surprises cost families both time and stress. Here’s how to avoid them.

1. Illusory Prices

College prices aren’t what they seem, and that’s both good and bad. On the plus side, the net price of many schools, especially many of the priciest institutions, are actually thousands of dollars lower than the advertised sticker price. For instance, Dartmouth College in Hanover, New Hampshire, and Claremont McKenna College in Claremont, California, both had costs of attendance (including tuition, fees and living expenses) in the 2015-16 school year that that topped $60,000 annually. However, these schools are also generous with aid.

According to the National Center for Education Statistics, both schools — combined with federal, state and local resources — can award enough scholarship and grant aid to bring the net prices way down. For example, in the 2014-15 school year, the average net price for both these schools were under $17,000 annually for families earning between $48,001 and $75,000.

To get a clearer idea of what you’ll pay, use the school’s net price calculator before applying, says Steve Booker, director of financial aid for Rollins College in Winter Park, Florida. Every school that receives federal funding is required to have a net price calculator available to both prospective and accepted students. These calculators are the best way to get a college costs estimate “that’s more tailored to [a student’s] income, their assets and their academics versus looking at the average,” Booker says.

2. Creeping Rates

College costs don’t stand still. Over the past decade, tuition prices have increased an average of 3.4 percent annually at public four-year institutions and 2.4 percent at private schools, reports the College Board. However, that varies significantly between states and institutions. Published tuition prices at public colleges in Arizona, for example, have risen more than 80 percent between 2008 and 2015, according to the Center on Budget and Policy Priorities, while Hawaii, Georgia, and Louisiana have jacked up public school prices by more than 67 percent.

To help families budget for four years of college, several schools, including Hardin-Simmons University in Texas, Oklahoma State University and the University of Texas at Dallas, offer tuition lock or guarantee programs that freeze tuition for four to five years. However, tuition lock programs typically only cover tuition and fees, which means that families can still wind up with a higher bill each year if room and board rates rise.

3. Sneaky Housing Costs

Tuition costs are oftentimes outweighed by room and board.

“Certainly at public schools, [room and board] is going to be as much if not more” than tuition, Booker says. “In a lot of cases it’s twice as much as their tuition, but at private schools it’s typically much less than their tuition.”

Research from the College Board shows that for the 2015-16 school year, room and board were an average of $728 higher than tuition at four-year in-state public schools. On the other hand, room and board were an average of $20,889 lower than tuition on average at four-year nonprofit private schools.

The good news is that students usually have multiple housing options. Many schools offer tiered room and board plans that give penny-pinching students who don’t mind extra roommates the chance to save some dough. Off campus digs might also be cheaper than on-campus dorms, and schools typically provide free rooms plus stipends for students who work as on-campus resident advisors.

4. Overestimated Worth

One of the biggest obstacles that prevent students from getting aid is simply believing that they won’t qualify. In an analysis of 2007-08 Pell Grant data, financial aid author and education policy analyst Mark Kantrowitz estimated that 2.3 million students who would have been eligible missed out on full or partial grants because they didn’t apply. Nearly 70 percent of those students attended two-year institutions. In addition to being eligible for federal aid, students attending community and technical colleges are also eligible for awards from their schools, says Lisa Kirmer, vice-president of student services for Flint Hills Technical College in Emporia, Kansas.

“We actually have several scholarships that either go un-awarded every year just because we don’t have applicants, or we have to go track students down and encourage them to apply,” she says. “Students think that the financial aid is not available.”

Even if you’re truly not eligible for need-based aid, that’s okay. Colleges, states and private organizations routinely offer merit-based awards, even to students who aren’t top scholars or athletes.

5. Ever-Changing Financial Aid Formulas

The federal government has its own formula for determining a family’s financial need, but each school also has its own institutional methodology that’s used to pass out aid. While virtually all schools require students to complete the Free Application for Federal Student Aid (FAFSA) to be eligible for need-based awards, nearly 400 colleges and scholarship programs also require families to fill out the CSS/PROFILE, a separate financial aid document that considers some assets that are sheltered in the federal aid methodology, such as the equity in a family’s primary home.

An extra confusing part of the CSS/PROFILE is that, unlike the FAFSA, it’s neither uniform nor free. All schools that use the PROFILE require families to complete a standard set of base questions, but individual institutions can also add supplemental questions on top. The College Board’s website has a list of the institutions that require the CSS/PROFILE for the 2016-17 school year.

Even after receiving information from the FAFSA and CSS/PROFILE, schools have their own number-crunching methods to determine financial aid. All this means that you should apply for aid at every school you’re admitted to. Even if School A offers a laughably small amount of aid, School B could make a much more generous offer.

6. Vanishing Awards

“[Students] think that once they have applied, that will just carry them throughout their tenure in college,” Lisa Kirmer says. “We have to remind students that they have to apply [for financial aid] every year.”

It is also possible to lose financial aid. On top of applying for aid every year, students should be mindful of any strings attached to their scholarships or grants, such as GPA, course load or disciplinary requirements.

A mega-boost in a family’s income or assets can also subtract aid from one year to the next, but the reverse is true, too. Students who have a substantial financial change, such as unexpected child care or medical expenses, a reduction in work hours, layoff or death in the family are eligible to have their aid packages re-evaluated and adjusted.

7. Separate Rules for Separate Families

The financial aid rules are different for divorced and separated parents than they are for married ones. Not understanding that change can cost you, like it did in the following case, says Jack Schacht, founder of My College Planning Team admissions and financial aid consulting firm in Wheaton, Illinois.

“A [divorced] mother filled out the FAFSA, and she included the father’s assets because they had a joint custody arrangement, and she just assumed that she had to report all of the father’s and her assets,” Schacht explains. “Not true. …The rule is very clear that it’s who the child lives with the majority of the time. Only that parent’s assets need to be reported.”

According to the Department of Education, stepparent assets are fair game on the FAFSA as are child support payments.

8. Overly Complex Rules

The federal financial aid system is riddled with loopholes that make it all too easy for families to lose college dollars. For example, depending on a family’s income and assets, they might be eligible for a substantially larger aid award if they store their college funds in a savings, checking or investment account in the parent’s name, rather than a student’s, Schacht says. Accidentally reporting assets that are sheltered, such as money in a retirement account, life insurance plan, annuity or equity in a primary home can also cost you.

The intricacies of the federal aid system are easy to get lost in — which is part of the reason why schools offer financial aid offices to help navigate the paperwork.

“In reality, financial aid goes to parents who are knowledgeable about the process,” Schacht says.

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